Council on American-Islamic Relations Action Network, Inc. v. Gaubatz

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

COUNCIL ON AMERICAN-ISLAMIC
RELATIONS ACTION NETWORK, INC., et al.,

Plaintiffs,
Civil Action No. 09-02030 (CKK)
v.

PAUL DAVID GAUBATZ, et al.,

Defendants.

MEMORANDUM OPINION AND ORDER
(September 17, 2012)

Plaintiffs Council on American-Islamic Relations Action Network, Inc. (“CAIR-AN”)

and CAIR-Foundation, Inc. (“CAIR-F”) bring this action against two sets of defendants: David

Gaubatz and Chris Gaubatz (together, the “Gaubatz Defendants”); and the Center for Security

Policy, Inc. (“CSP”) and three of its employees, Christine Brim, Adam Savit, and Sarah Pavlis

(collectively with CSP, the “CSP Defendants”). Plaintiffs allege that Defendants conceived and

carried out a scheme to place Chris Gaubatz in an internship with CAIR-AN under an assumed

identity, which allowed him to remove and copy thousands of Plaintiffs’ internal documents and

to record private conversations involving Plaintiffs’ employees without consent or authorization.

Plaintiffs contend that Defendants thereafter publicly disclosed and published the contents of

those documents and recordings. In this action, Plaintiffs seek relief under the Federal Wiretap

Act, 18 U.S.C. §§ 2510-2522, the District of Columbia analog (the “D.C. Wiretap Act”), D.C.

CODE §§ 23-541-23-556, the Stored Communications Act, 18 U.S.C. §§ 2701-2712, and the

common law of the District of Columbia.1

There are two motions pending before the Court: the CSP Defendants’ [97] Motion to

Dismiss Certain Claims (“Motion to Dismiss”); and Plaintiffs’ [112] Motion for Leave to File

Third Amended Complaint (“Motion to Amend”). Through their Motion to Dismiss, the CSP

Defendants argue that Plaintiffs cannot recover against them under the Federal and D.C. Wiretap

Acts or the Stored Communications Act. Through their Motion to Amend, Plaintiffs seek to add

a third set of Defendants—namely, the Society of Americans for National Existence (“SANE”)

and its President, David Yerushalmi (“Yerushalmi”). Plaintiffs also look to assert additional

claims against all Defendants, narrow the scope of their demand for damages, and add certain

clarifying allegations in support of extant claims. Upon careful consideration of the parties’

submissions, the relevant authorities, and the record as a whole, the CSP Defendants’ Motion to

Dismiss shall be GRANTED IN PART and DENIED IN PART and Plaintiffs’ Motion to Amend

shall also be GRANTED IN PART and DENIED IN PART. (See infra Part IV.)

I. BACKGROUND

A. Factual Background

The following factual background is derived from the well-pleaded factual allegations in

the Second Amended Complaint. See Erickson v. Pardus, 551 U.S. 89, 94 (2007) (“[W]hen

ruling on a defendant’s motion to dismiss, a judge must accept as true all of the factual

allegations contained in the complaint.”). The Court shall also provide parallel citations to, and

relevant allegations from, Plaintiffs’ proposed Third Amended Complaint.

1
The Federal Wiretap Act and the Stored Communications Act are commonly used shorthands
for Titles I and II of the Electronic Communications Privacy Act of 1986 (the “ECPA”), 18
U.S.C. §§ 2510-2712.
2

1. The Parties

CAIR-AN is a self-described national Muslim advocacy group with a mission that

includes enhancing the understanding of Islam and promoting a positive image of Muslims in the

United States. (Second Am. Compl., ECF No. [76], ¶ 10; Third Am. Compl., ECF No. [112-1],

¶ 10.) CAIR-F is an organization supporting CAIR-AN and its mission. (Second Am. Compl. ¶

11; Third Am. Compl. ¶ 11.) Both CAIR-AN and CAIR-F are non-profit corporations

incorporated in the District of Columbia. (Second Am. Compl. ¶¶ 10-11; Third Am. Compl. ¶¶

10-11.) They share physical office space in the District of Columbia that is generally closed to

the public and accessible to third parties only upon invitation. (Second Am. Compl. ¶¶ 10-11,

27; Third Am. Compl. ¶¶ 10-11, 34.)

Chris Gaubatz is David Gaubatz’s son. (Second Am. Compl. ¶¶ 12-13; Third Am.

Compl. ¶¶ 12-13.) CSP is a non-profit corporation incorporated and located in the District of

Columbia. (Second Am. Compl. ¶ 14; Third Am. Compl. ¶ 14.) Christine Brim, Adam Savit,

and Sarah Pavlis are all employed by CSP. (Second Am. Compl. ¶¶ 15-17; Third Am. Compl. ¶¶

15-17.) SANE is a non-profit corporation incorporated and located in Arizona. (Third Am.

Compl. ¶ 19.) Yerushalmi is SANE’s President and CSP’s General Counsel. (Id. ¶ 18.)

2. Chris Gaubatz’s Internship with CAIR-AN

Sometime prior to April 2008, Defendants2 conceived a plan to infiltrate Plaintiffs’

offices with the aim of obtaining Plaintiffs’ internal documents and recording conversations

involving Plaintiffs’ employees. (Second Am. Compl. ¶ 19; Third Am. Compl. ¶ 21.)

According to their plan, Chris Gaubatz would attempt to secure an internship with CAIR-AN

under an assumed identity and deliver any materials that he was able to obtain from Plaintiffs’

2
Unless otherwise indicated, references to “Defendants” include SANE and Yerushalmi.
3

offices to David Gaubatz and the CSP Defendants for further dissemination. (Second Am.

Compl. ¶ 19; Third Am. Compl. ¶ 21.)

Consistent with the agreed-upon plan, Chris Gaubatz sought and obtained an internship

with the office for CAIR-AN Maryland/Virginia in April 2008. (Second Am. Compl. ¶ 20;

Third Am. Compl. ¶ 26.) But in June 2008, after it was announced that the office for CAIR-AN

Maryland/Virginia would be closing, Chris Gaubatz sought an internship at CAIR-AN’s

headquarters in the District of Columbia. (Second Am. Compl. ¶¶ 10, 21; Third Am. Compl. ¶¶

10, 27.)

Chris Gaubatz obtained his internship with CAIR-AN under false pretenses. During the

application process, Chris Gaubatz, acting on Yerushalmi’s advice, made false statements and

omitted important facts about his background, interests, and intentions. (Second Am. Compl. ¶¶

22-23; Third Am. Compl. ¶¶ 28-30.) Among other things, he used an assumed name and

represented that he was a student at a liberal arts college, that his father was in the construction

business, and that he was a practicing Muslim. (Second Am. Compl. ¶ 22; Third Am. Compl. ¶

28.) When Chris Gaubatz made these representations, he knew them to be false, and he made

them in order to induce Plaintiffs to repose trust and confidence in him so that he might obtain an

internship with CAIR-AN. (Second Am. Compl. ¶¶ 23-25; Third Am. Compl. ¶¶ 30-32.) He

succeeded and was hired as an intern. (Second Am. Compl. ¶ 29; Third Am. Compl. ¶ 36.)

As a condition of, and in consideration for, his internship, Chris Gaubatz signed a

confidentiality and non-disclosure agreement. (Second Am. Compl. ¶¶ 29, 102; Third Am.

Compl. ¶¶ 36, 112.) The agreement provides:

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Non-Disclosure of “Confidential Information”

I agree that I shall not at any time after the termination of my
internship with CAIR, use for myself or others, or disclose or
divulge to others . . . any trade secrets, confidential information, or
any other proprietary data of CAIR in violation of this agreement
. . . . The intern further agrees to take and protect the secrecy of,
and to avoid disclosure or use of, the “Confidential Information” in
order to prevent it from falling into public domain or into the
possession of persons not bound to maintain the confidentiality of
Confidential Information.

(Second Am. Compl., Ex. A at 1-2.) Defendants were aware of the confidentiality agreement

because Chris Gaubatz told them that he had signed it. (Id. ¶ 31; Third Am. Compl. ¶ 38.)

3. The Collection of Materials

Chris Gaubatz worked as an intern for CAIR-AN until August 2008, though he returned

to perform additional work over a weekend in September 2008. (Second Am. Compl. ¶ 32;

Third Am. Compl. ¶ 39.) During the course of his internship, he sought to collect information

about Plaintiffs and their employees with the intention of publicly disclosing that information for

profit and in order to cast Plaintiffs in a negative light. (Second Am. Compl. ¶ 36; Third Am.

Compl. ¶ 45.) To that end, he physically removed more than twelve thousand of Plaintiffs’

internal documents without authorization and delivered those documents to David Gaubatz.

(Second Am. Compl. ¶¶ 37-38; Third Am. Compl. ¶¶ 46-47.) Electronic documents, including

e-mails and computer-generated spreadsheets, were obtained by accessing Plaintiffs’ computers

and computer systems with user-names and passwords that were not assigned to him. (Second

Am. Compl. ¶¶ 40-41; Third Am. Compl. ¶¶ 49-50.)

Chris Gaubatz also used a concealed electronic device to make audio and video

recordings of conversations involving Plaintiffs’ employees without authorization and consent.

(Second Am. Compl. ¶ 42; Third Am. Compl. ¶ 51.) He was able to compile over fifty computer

5

discs containing recordings of Plaintiffs’ employees. (Second Am. Compl. ¶ 44; Third Am.

Compl. ¶ 53.) The Gaubatz Defendants delivered the recordings to CSP and Christine Brim

who, with the assistance of the other CSP Defendants, organized and edited the recordings.

(Second Am. Compl. ¶¶ 44-46; Third Am. Compl. ¶¶ 53, 55-56.)

4. Agreements Between Defendants

In June 2007, before Chris Gaubatz sought an internship with CAIR-AN, David Gaubatz

entered into a written agreement with SANE. (Third Am. Compl. ¶ 22.) Pursuant to this

agreement, executed by Yerushalmi on SANE’s behalf, SANE engaged David Gaubatz to “serve

as the Director of the Mapping Shari’a in America: Knowing the Enemy Project.” (Id., Ex. A at

PDG000010.) The two-page agreement does not specify the nature of the services David

Gaubatz was expected to provide or the contours of the referenced project. (Id., Ex. A at

PDG000010-11.) It does, however, speak of “field work” and contemplate that David Gaubatz

would oversee the collection of “field data.” (Id., Ex. A at PDG000010.) “All work product,

including written, electronic, and digital material collected . . . [would] be the exclusive property

of SANE.” (Id.) Subsequently, although it is not entirely clear when, David Gaubatz and

SANE terminated their original agreement through a settlement. (Id. ¶ 54.) In their written

settlement agreement, David Gaubatz represented that he was “in possession of the materials

collected during and in furtherance of the [Mapping Shari’a] Project, including the printed

materials, video, and audio tapes.” (Id., Ex. C at PDG000012.) David Gaubatz agreed to deliver

all such materials to CSP. (Id., Ex. C at PDG000013.)

David Gaubatz also entered into two written agreements with CSP. (Second Am. Compl.

¶ 35; Third Am. Compl. ¶ 42.) One of these agreements, entered into in September 2008,

contemplated that members of David Gaubatz’s “team” would “secure volunteer positions within
6

The Council on American-Islamic Relations” and “secretly record (using audio and video

recording devices) activities they observe within CAIR offices and other locations or events, as

directed by [CSP] in its sole discretion.” (Third Am. Compl., Ex. B at CSP000176.)

5. The Public Disclosure of Materials

Defendants publicly disclosed the documents and recordings that they obtained from

Plaintiffs. The CSP Defendants provided a compilation of recordings to the third-party publisher

of WND Books and a website identified as WorldNet Daily, http://www.wnd.com (last visited

September 4, 2012). (Second Am. Compl. ¶ 47; Third Am. Compl. ¶ 57.) Meanwhile, David

Gaubatz posted documents and recordings on his blog, David Gaubatz,

http://dgaubatz.blogspot.com (last visited September 4, 2012). (Second Am. Compl. ¶¶ 56-57;

Third Am. Compl. ¶¶ 66-67.) In addition, David Gaubatz and a co-author wrote a book about

Chris Gaubatz’s internship with CAIR-AN. (Second Am. Compl. ¶ 48; Third Am. Compl. ¶ 58

see also P. David Gaubatz & Paul Sperry, Muslim Mafia: Inside the Secret World That’s

Conspiring to Islamize America (1st ed., WND Books 2009).) In that book, the authors

characterize Chris Gaubatz’s internship as a “six-month counterintelligence operation,”

admitting that Chris Gaubatz “routinely load[ed] the trunk of his car with boxes of sensitive

documents and deliver[ed] them into the custody of investigative project leader P. David

Gaubatz.” (Second Am. Compl. ¶ 50; Third Am. Compl. ¶ 60.) The book references and quotes

from materials obtained from Plaintiffs’ offices, including internal memoranda, minutes of board

meetings, budget reports, real estate records, bank statements, strategy papers, employee

evaluations, and e-mails. (Second Am. Compl. ¶ 51; Third Am. Compl. ¶ 61.)

7

B. Procedural Background

CAIR-AN filed its original Complaint on October 29, 2009, naming as defendants the

Gaubatz Defendants and ten John and Jane Does whose identities were then unknown but who

were alleged to have participated in and benefitted from the activities alleged in the Complaint.

(See Compl., ECF No. [1], ¶¶ 12-14.) CAIR-AN asserted a single claim under the Stored

Communications Act and common law claims for conversion, breach of fiduciary duty, breach of

contract, and trespass. (See id. ¶¶ 49-77.)

Contemporaneous with the filing of the Complaint, CAIR-AN moved for a temporary

restraining order and a preliminary injunction. (See Mem. in Supp. of Pl.’s Mot. for a TRO &

Prelim. Inj., ECF No. [2-1].) On November 2, 2009, after repeated efforts to contact the Gaubatz

Defendants proved fruitless, the Court held an ex parte hearing to address CAIR-AN’s request

for a temporary restraining order. (See Min. Entry (Nov. 2, 2009).) On November 3, 2009, the

Court granted in part and denied in part CAIR-AN’s motion for a temporary restraining order,

temporarily prohibiting the Gaubatz Defendants from making certain uses of materials obtained

from Plaintiffs’ offices and requiring the return of such materials to CAIR-AN’s counsel. See

Council on American-Islamic Relations v. Gaubatz, 667 F. Supp. 2d 67 (D.D.C. 2009).

On November 19, 2009, CAIR-AN and the Gaubatz Defendants jointly moved for a

consent order granting CAIR-AN’s motion for a preliminary injunction. (See Joint Mot. to Enter

Consent Order Granting Prelim. Inj., ECF No. [19].) That same day, the Court entered the

proposed consent order. (See Consent Order Granting Prelim. Inj., ECF No. [22].) Pursuant to

that order, the Gaubatz Defendants are (1) enjoined from making any use, disclosure, or

publication of any document obtained from any office or facility of CAIR-AN, any recording of

meetings of or conversations involving CAIR-AN’s officials or employees, and any copies of
8

such documents or recordings, (2) required to remove from any website or blog under their

control any such documents or recordings, and (3) required to return any such documents or

recordings, including any copies, to CAIR-AN’s counsel. (See id. ¶¶ 1-4.) Subsequently, the

Court clarified that its order permits the Gaubatz Defendants’ counsel, but not the Gaubatz

Defendants themselves, to retain copies of the documents at issue for indexing purposes. (See

Order (Dec. 10, 2009), ECF No. [30], at 2.) Absent further action from the Court, the

preliminary injunction will remain in effect throughout this action. (See Consent Order Granting

Prelim. Inj., ECF No. [22], ¶ 5.)

Following resolution of CAIR-AN’s motion for a preliminary injunction, the Court

granted CAIR-AN leave to depose CSP based on CAIR-AN’s representations that CSP was

believed to be in possession of materials obtained from Plaintiffs’ offices. (See Order (Dec. 10,

2009), ECF No. [30], at 4.) CAIR-AN subsequently deposed Christine Brim as CSP’s

designated agent under Federal Rule of Civil Procedure 30(b)(6). (See Tr. of Dep. of Christine

Brim, ECF No. [48-3].)

On December 20, 2009, the Gaubatz Defendants moved to dismiss the original

Complaint. On March 1, 2010 and April 12, 2011, Plaintiffs moved to amend the Complaint.

The Court resolved all these motions on June 24, 2011, granting in part and denying in part the

Gaubatz Defendants’ motion to dismiss and granting both of Plaintiffs’ motion to amend. See

Council on American-Islamic Relations Action Network, Inc. v. Gaubatz, 793 F. Supp. 2d 311

(D.D.C. 2011). First, the Court granted Plaintiffs leave to amend the Complaint to (1) clarify

that references to the “Council of American Islamic Relations” in the Complaint are to CAIR-

AN, (2) add CAIR-F as a second plaintiff, (3) add the CSP Defendants as defendants, (4) assert

statutory claims under the Federal Wiretap Act, the D.C. Wiretap Act, and common law claims
9

for unjust enrichment and tortious interference with contract, and (5) introduce a handful of

supplemental factual allegations in support of extant claims. See id. at 322-30. Second, the

Court granted the Gaubatz Defendants’ motion to dismiss insofar as it sought dismissal of

Plaintiffs’ claim for the conversion of electronic data (one component of Count Three of the

Second Amended Complaint) and otherwise denied the motion, including insofar as it sought

dismissal of Plaintiffs’ claim for the conversion of physical documents (the remainder of Count

Three of the Second Amended Complaint). See id. at 330-45.

After the CSP Defendants filed an Answer to the Second Amended Complaint, the Court

held a scheduling conference. (See Scheduling and Procedures Order (Sept. 1, 2011), ECF No.

[99].) The Court set a schedule for discovery, which remains ongoing, and for the briefing of the

CSP Defendants’ pending Motion to Dismiss. (See id. at 5-6.) The parties briefed the Motion to

Dismiss between September 1, 2011 and November 8, 2011. (See Mem. of P. & A. in Supp. of

Mot. to Dismiss Counts I & II (“CSP Defs.’ MTD Mem.”), ECF No. [97]; Mem. of P. & A. in

Opp’n to Mot. to Dismiss Counts I & II (“Pls.’ MTD Opp’n”), ECF No. [102]; Reply Br. Mem.

of P. & A. in Supp. of Mot. to Dismiss Counts I & II, ECF No. [108].)

On March 2, 2012, within the Court-ordered deadline for amendments to pleadings,

Plaintiffs filed another motion to amend their Complaint. (See Pls.’ Mot. for Leave to File Third

Am. Compl. & Mem. in Supp. of Mot. for Leave to File Third Am. Compl., ECF No. [111].)

Before receiving a response from Defendants, the Court denied the motion without prejudice,

with leave to renew after certifying compliance with the meet-and-confer requirements of Local

Civil Rule 7(m) and providing “a more particularized discussion as to why leave to amend

should be granted as to each of the five principal changes identified.” (Min. Order (Mar. 5,

2012).) The parties then briefed the pending Motion to Amend between March 5, 2012 and
10

April 12, 2012. (See Pls.’ Mot. for Leave to File Third Am. Compl. & Mem. in Supp. of Mot.

for Leave to File Third Am. Compl. (“Pls.’ MTA Mem.”), ECF No. [112]; Resp. Br. Mem. of P.

& A. in Opp’n to Pls.’ Mot. for Leave to File Third Am. Compl. (“Defs.’ MTA Opp’n”), ECF

Nos. [113, 116]; Pls.’ Reply to Defs.’ Opp’n to the Mot. for Leave to File the Third Am. Compl.,

ECF Nos. [118, 119].)

Both pending motions are fully briefed and ripe for a decision. In an exercise of its

discretion, the Court finds that holding oral argument on the pending motions would not be of

assistance in rendering a decision. See LCvR 7(f).

II. LEGAL STANDARDS

Under the Federal Rules of Civil Procedure, a complaint must contain “a short and plain

statement of the claim showing that the pleader is entitled to relief,” FED. R. CIV. P. (8)(a), “in

order to ‘give the defendant fair notice of what the . . . claim is and the grounds upon which it

rests,’” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355

U.S. 41, 47 (1957)). Rule 12(b)(6) provides a vehicle for parties to challenge the sufficiency of a

complaint on the ground that it “fail[s] to state a claim upon which relief can be granted.” FED.

R. CIV. P. 12(b)(6). When presented with a motion to dismiss for failure to state a claim, the

district court must accept as true the well-pleaded factual allegations contained in the complaint.

Atherton v. D.C. Office of Mayor, 567 F.3d 672, 681 (D.C. Cir. 2009), cert. denied, __ U.S. __,

130 S. Ct. 2064 (2010). Although “detailed factual allegations” are not necessary to withstand a

Rule 12(b)(6) motion to dismiss, to provide the “grounds” of “entitle[ment] to relief,” a plaintiff

must furnish “more than labels and conclusions” or “a formulaic recitation of the elements of a

cause of action.” Twombly, 550 U.S. at 555. “Nor does a complaint suffice if it tenders ‘naked

assertion[s]’ devoid of ‘further factual enhancement.’” Ashcroft v. Iqbal, 556 U.S. 662, 678
11

(2009) (quoting Twombly, 550 U.S. at 557). Rather, a complaint must contain sufficient factual

allegations that, if accepted as true, “state a claim to relief that is plausible on its face.”

Twombly, 550 U.S. at 570. “A claim has facial plausibility when the plaintiff pleads factual

content that allows the court to draw the reasonable inference that the defendant is liable for the

misconduct alleged.” Iqbal, 556 U.S. at 678. The plaintiff must provide more than just “a sheer

possibility that a defendant has acted unlawfully.” Id. When a complaint’s well-pleaded facts do

not enable a court, “draw[ing] on its judicial experience and common sense,” “to infer more than

the mere possibility of misconduct,” the complaint has not shown that the pleader is entitled to

relief. Id. at 679.

Under the Federal Rules of Civil Procedure, a party may amend its pleadings once as a

matter of course within a prescribed time period. See FED. R. CIV. P. 15(a)(1). Where, as here, a

party seeks to amend its pleadings outside that time period or for a successive time, it may do so

only with the opposing party’s written consent or the district court’s leave. See FED. R. CIV. P.

15(a)(2). The decision whether to grant leave to amend a complaint is entrusted to the sound

discretion of the district court, but leave “should be freely given unless there is a good reason,

such as futility, to the contrary.” Willoughby v. Potomac Elec. Power Co., 100 F.3d 999, 1003

(D.C. Cir. 1996), cert. denied, 520 U.S. 1197 (1997). As the Supreme Court has observed:

If the underlying facts or circumstances relied upon by a plaintiff
may be a proper subject of relief, he ought to be afforded an
opportunity to test his claim on the merits. In the absence of any
apparent or declared reason—such as undue delay, bad faith or
dilatory motive on the part of the movant, repeated failure to cure
deficiencies by amendments previously allowed, undue prejudice
to the opposing party by virtue of allowance of the amendment,
futility of amendment, etc.—the leave sought should, as the rules
require, be “freely given.”

12

Foman v. Davis, 371 U.S. 178, 182 (1962). “[A] district court has discretion to deny a motion to

amend on grounds of futility where the proposed pleading would not survive a motion to

dismiss.” Nat’l Wrestling Coaches Ass’n v. Dep’t of Educ., 366 F.3d 930, 945 (D.C. Cir. 2004),

cert. denied, 545 U.S. 1104 (2005). Review for futility is practically “identical to review of a

Rule 12(b)(6) dismissal based on the allegations in the amended complaint.” In re Interbank

Funding Corp. Secs. Litig., 629 F.3d 213, 215-16 (D.C. Cir. 2010) (quotation marks omitted).

Because leave to amend should be liberally granted, the party opposing amendment bears the

burden of coming forward with a colorable basis for denying leave to amend. Abdullah v.

Washington, 530 F. Supp. 2d 112, 115 (D.D.C. 2008).3

III. DISCUSSION

The Court shall first address the CSP Defendants’ Motion to Dismiss. (See infra Part

III.A.) Thereafter, the Court shall turn to Plaintiffs’ Motion to Amend. (See infra Part III.B.)

A. The CSP Defendants’ Motion to Dismiss

The CSP Defendants seek the dismissal of Counts One and Two of the Second Amended

Complaint. The Court addresses each count in turn.

1. Count One of the Second Amended
Complaint (the Federal and D.C. Wiretap Acts)

Plaintiffs bring Count One of the Second Amended Complaint under the Federal Wiretap

Act (Title I of the ECPA), 18 U.S.C. §§ 2510-2522, and the D.C. Wiretap Act, D.C. CODE §§ 23-

3
Briefly, the Court notes that, in connection with the pending motions, Defendants repeatedly
intimate that Plaintiffs’ factual allegations should be required to meet a higher substantive
burden—either in connection with the notice pleading requirements of Federal Rule of Civil
Procedure 8 or the futility analysis called for in connection with a motion to amend brought
under Federal Rule of Civil Procedure 15—because the parties have engaged in some discovery.
The CSP Defendants cite no authority in support of this radical position. The reason is simple:
there is none.
13

541-23-556. Both statutes proscribe, among other conduct, the intentional interception of oral

communications. See 18 U.S.C. § 2511(1)(a); D.C. CODE § 23-542(a)(1). Of the various

Defendants in this case, only one—Chris Gaubatz—is alleged to have directly intercepted oral

communications. Plaintiffs nonetheless contend that they can pursue claims under the Federal

and D.C. Wiretap Acts against the CSP Defendants, and offer a handful of theories in support of

that contention. The Court addresses each theory in turn.

i. Procurement Liability.

Plaintiffs allege that the CSP Defendants “procured Defendant Chris Gaubatz to intercept

the oral communications of Plaintiffs’ employees.” (Second Am. Compl. ¶ 74; see also Third

Am. Compl. ¶ 84.) In their Motion to Dismiss, the CSP Defendants concede that the D.C.

Wiretap Act explicitly contemplates a civil right of action against a party who has “procured”

another person to intercept oral communications. (See CSP Defs.’ MTD Mem. at 25 (“[T]he

D.C. Wiretap Act retains a civil remedy for a ‘procurement’ violation.”).) See also D.C. CODE §

23-554(a)(1) (“Any person whose wire or oral communication is intercepted, disclosed, or used

in violation of this subchapter shall . . . have a civil cause of action against any person who . . .

procures any other person to intercept, disclose, or use [wire or oral] communications.”). Thus,

the only question raised here is whether such a right of action exists under the Federal Wiretap

Act.

The Federal Wiretap Act makes it a criminal offense for any person to “procure[] any

other person to intercept” an oral communication. 18 U.S.C. § 2511(1)(a). Prior to 1986, the

Federal Wiretap Act also allowed plaintiffs to bring a civil action against a party who had

“procure[d]” another person to intercept oral communications. 18 U.S.C. § 2520 (1970). But

14

Congress deleted the procurement language from the civil liability provision when it amended

the statute in 1986. Today, the civil liability provision states, in relevant part:

[A]ny person whose wire, oral, or electronic communication is
intercepted, disclosed, or intentionally used in violation of this
chapter may in a civil action recover from the person or entity,
other than the United States, which engaged in that violation such
relief as may be appropriate.

18 U.S.C. § 2520(a) (2011). The first clause defines the universe of individuals with standing to

bring suit—i.e., “any person whose wire, oral, or electronic communication is intercepted,

disclosed, or intentionally used in violation of th[e] chapter.” Id. The remainder of the provision

defines the universe of defendants subject to suit—i.e., any person “which engaged in that

violation.” Id. Viewed in its full context, the phrase “that violation” plainly incorporates the

description set forth in the first clause, meaning that it “refers only to illegal interception

disclosure, or use, and not to procuring interception by another.” Peavy v. WFAA-TV, Inc., 221

F.3d 158, 169 (5th Cir. 2000), cert. denied, 532 U.S. 1051 (2001); see also Hurst v. Phillips, No.

04-2591 M1/P, 2005 WL 2436712, at *3 (W.D. Tenn. Sept. 30, 2005); Gunderson v. Gunderson,

No. 02-1078-CVW-ODS, 2003 WL 1873912, at *2 (W.D. Mo. Apr. 14, 2003); Buckingham v.

Gailor, No. 00-CV-1568, 2001 WL 34036325, at *6 (D. Md. Mar. 27, 2001), aff’d, 20 F. App’x

243 (4th Cir. 2001) (per curiam); but see Lonegan v. Hasty, 436 F. Supp. 2d 419, 427-28

(E.D.N.Y. 2006). In short, the plain language of the statute limits civil liability to interception,

disclosure, and use. As one court of appeals has observed, “if Congress did not intend to delete a

civil procurement action, it can amend [the statute].” Peavy, 221 F.3d at 169. Congress has not

done so, even though the interpretation the Court adopts today has been the clear majority

position for well over a decade. Therefore, Plaintiffs cannot pursue a claim for procurement

liability against the CSP Defendants (or, for that matter, against any other Defendant) under the

15

Federal Wiretap Act. (See Second Am. Compl. ¶ 74; see also Third Am. Compl. ¶ 84.)

However, Plaintiffs’ procurement theory under the D.C. Wiretap Act, which has not been and

cannot be challenged on this basis, remains viable.

ii. Secondary Liability.

Plaintiffs allege that the CSP Defendants “conspired with” or “aided and abetted” Chris

Gaubatz in violating the Federal and D.C. Wiretap Acts. (Second Am. Compl. ¶¶ 75-76; see also

Third Am. Compl. ¶¶ 85-86.) In their Motion to Dismiss, the CSP Defendants argue that

Plaintiffs cannot pursue such a “secondary liability” theory because it is not cognizable under

either statute. (See CSP Defs.’ MTD Mem. at 8-9, 24-25.) In opposition, Plaintiffs maintain

only that a secondary liability theory is viable under the Stored Communications Act, but they

offer no rejoinder to the CSP Defendants’ argument that, as a purely legal matter, no such theory

is available under the Federal and D.C. Wiretap Acts. (See Pls.’ MTD Opp’n at 3-22.) Based on

the absence of a meaningful response, the Court shall exercise its discretion to treat the argument

that this theory is legally untenable as conceded. See Hopkins v. Women’s Div., Gen. Bd. of

Global Ministries, 284 F. Supp. 2d 15, 25 (D.D.C. 2003), aff’d, 98 F. App’x 8 (D.C. Cir. 2004)

(“It is well understood in this Circuit that when a plaintiff files an opposition to a dispositive

motion and addresses only certain arguments raised by the defendant, a court may treat those

arguments that the plaintiff failed to address as conceded.”); accord Lewis v. District of

Columbia, No. 10-5275, 2011 WL 321711, at *1 (D.C. Cir. Feb. 2, 2011) (per curiam). In any

event, a theory of secondary liability under these statutes would fail for substantially the same

reasons why such a theory fails under the Stored Communications Act. (See infra Part III.A.2.i.)

See also Kirch v. Embarq Mgmt. Co., No. 10-2047-JAR, 2011 WL 3651359, at *7 (D. Kan. Aug.

19, 2011); In re Toys R Us, Inc., Privacy Litig., No. 00-CV-2746, 2001 WL 34517252, at *7
16

(N.D. Cal Oct. 9, 2001). Accordingly, Plaintiffs may not pursue a claim for secondary liability

against the CSP Defendants (or any other Defendant) under the Federal or D.C. Wiretap Acts.

iii. Primary Liability.

Plaintiffs allege that the CSP Defendants are “primarily liable” under the Federal and

D.C. Wiretap Acts because they “willfully disclosed and used or endeavored to disclose and use

the contents of the intercepted communications.” (Second Am. Compl. ¶ 77; see also Third Am.

Compl. ¶ 87.) See also 18 U.S.C. § 2511(1)(c)-(d); D.C. CODE § 23-542(a)(2)-(3). The CSP

Defendants argue that this theory must fail for two basic reasons.

First, the CSP Defendants contend that Plaintiffs have failed to adduce sufficient factual

allegations to support an inference that Plaintiffs’ employees had a reasonable expectation that

their communications would not be subject to interception. (See CSP Defs.’ MTD Mem. at 10-

14.) See also 18 U.S.C. § 2510(2) (defining an “oral communication” as “any oral

communication uttered by a person exhibiting an expectation that such communication is not

subject to interception under circumstances justifying such expectation”). The CSP Defendants’

argument may or may not turn out to have merit after the parties have had an opportunity to

develop the evidentiary record, but it is woefully premature at this point. As the CSP Defendants

themselves observe, the relevant inquiry calls for the consideration of a host of intensely fact-

bound circumstances. (See CSP Defs.’ MTD Mem. at 12.) Requiring Plaintiffs to set forth such

detailed factual allegations in their Complaint would take us far beyond the realm of notice

pleading. At this early stage of the proceedings, Plaintiffs’ allegations are sufficient to permit an

inference that the communications at issue were made with a reasonable expectation that they

would not be subject to interception. (See Second Am. Compl. ¶¶ 3, 6, 27, 23, 29-30, 42-43, 63,

70, 78; see also Third Am. Compl. ¶¶ 3, 6, 34, 36-37, 51-52, 73 80, 88.) Cf. Colandrea v. Town
17

of Orangetown, 490 F. Supp. 2d 342, 347-48 (S.D.N.Y. 2007) (declining to rule on whether

communications were made with a reasonable expectation of non-interception at the motion to

dismiss stage).

Second, the CSP Defendants contend that Congress has established a “one-party consent”

rule available to private parties as a basis for avoiding liability and that Plaintiffs’ efforts to

“plead around” the rule are unavailing. (See CSP Defs.’ MTD Mem. at 10, 14-24.) True,

Congress has created an exception to criminal and civil liability for a private party “where such

person is a party to the communication or where one of the parties to the communication has

given prior consent to such interception unless such communication is intercepted for the

purpose of committing any criminal or tortious act in violation of the Constitution or laws of the

United States or of any State.” 18 U.S.C. § 2511(2)(d); see also D.C. CODE § 23-542(d)(3).

However, this is a defense and, as such, Plaintiffs need not anticipate it or “plead around” it. See

Doe v. Smith, 429 F.3d 706, 709 (7th Cir. 2005) (holding that 18 U.S.C. § 2511(2)(d) reflects a

defense that cannot justify dismissal); see also Flying Food Grp., Inc. v. NLRB, 471 F.3d 178,

183 (D.C. Cir. 2006).

In short, the CSP Defendants’ arguments regarding primary liability are not amenable to

resolution at this stage of the proceedings. The CSP Defendants may re-raise such arguments, if

18

appropriate, upon further development of the factual record. At this time, Plaintiffs are entitled

to conduct discovery on their primary liability theory.4

* * *

For the reasons set forth above, insofar as it seeks dismissal of Count One of the Second

Amended Complaint, the CSP Defendants’ Motion to Dismiss shall be GRANTED IN PART

and DENIED IN PART. Specifically, Count One shall be DISMISSED insofar as Plaintiffs seek

to hold the CSP Defendants (or any other Defendant) liable (1) under the Federal or D.C.

Wiretap Acts using a theory of secondary liability and (2) under the Federal Wiretap Act using a

theory of procurement liability. Plaintiffs are, however, entitled to conduct discovery on their

theories that the CSP Defendants are (1) primarily liable under either the Federal or D.C.

Wiretap Acts or (2) liable under a procurement theory under the D.C. Wiretap Act only.

2. Count Two of the Second Amended
Complaint (the Stored Communications Act)

Plaintiffs bring Count Two of the Second Amended Complaint under the Stored

Communications Act (Title II of the ECPA), 18 U.S.C. §§ 2701-2712. Specifically, Plaintiffs

claim that Defendants violated 18 U.S.C. § 2701(a), which provides:

[W]hoever--

(1) intentionally accesses without authorization a facility
through which an electronic communication service is
provided; or

4
Because the Court concludes that Plaintiffs’ primary liability theory under the Federal and
D.C. Wiretap Acts survives the CSP Defendants’ motion to dismiss on this basis, it need not
address Plaintiffs’ alternative argument that they can pursue their claim under the theory that
Chris Gaubatz was acting as the CSP Defendants’ agent in intercepting oral communications.
(See Pls.’ MTD Opp’n at 10-11.) However, if the Court were required to reach that question, it
would find that Plaintiffs’ agency theory under the Federal and D.C. Wiretap Acts would fail for
the same reasons such a theory fails under the Stored Communications Act. (See infra Part
III.A.2.ii.)
19

(2) intentionally exceeds an authorization to access that
facility;

and thereby obtains, alters, or prevents authorized access to a wire
or electronic communication while it is in electronic storage in
such system shall be punished as provided in subsection (b) of this
section.

18 U.S.C. § 2701(a). Congress created a civil cause of action for violations of Section 2701(a)

(and other parts of the Stored Communications Act not at issue in this case) through 18 U.S.C. §

2707(a). That section provides:

[A]ny . . . person aggrieved by any violation of this chapter in
which the conduct constituting the violation is engaged in with a
knowing or intentional state of mind may, in a civil action, recover
from the person or entity . . . which engaged in that violation such
relief as may be appropriate.

Id. § 2707(a). Plaintiffs offer two theories as to how the CSP Defendants may be held liable

under these provisions. The Court addresses each theory in turn.

i. Secondary Liability.

Of the various defendants, only Chris Gaubatz is alleged to have accessed Plaintiffs’

computers and computer servers, networks and systems. (See Second Am. Compl. ¶¶ 3, 37, 40-

41, 60, 62, 80-85.) The other Defendants, including the CSP Defendants, are sued under a theory

that they “conspired with” or “aided and abetted” Chris Gaubatz in doing so. (See id. ¶¶ 82-83;

see also Third Am. Compl. ¶¶ 92-93.) However, such a theory of liability is not, as a matter of

law, cognizable under the Stored Communications Act. When Congress created a civil right of

action for violations of the Stored Communications Act in Section 2707(a), it, not surprisingly,

limited the right of action to “violation[s] of th[e] chapter.” 18 U.S.C. § 2707(a). And Section

2701(a), the provision Plaintiffs claim was violated in this case, only proscribes “intentionally

access[ing]” or “intentionally exceed[ing] an authorization” a facility through which an

20

electronic communication service is provided. Id. § 2701(a). Critically, in delineating the

boundaries of criminal liability under Section 2701(a) and civil liability under Section 2707(a),

Congress made no mention of conspiracy, aiding and abetting, or any other form of secondary

liability. The statute’s plain language shows that Congress had one category of offenders in

mind—i.e., those who directly access, or exceed their authority to access, a facility through

which an electronic communication service is provided.

“When a statute is precise about who can be liable courts should not implicitly read

secondary liability into the statute.” Freeman v. DirecTV, 457 F.3d 1001, 1006 (9th Cir. 2006)

(quotation marks and notations omitted); accord Doe v. GTE Corp., 347 F.3d 655, 658 (7th Cir.

2003); see also Cent. Bank of Denver, N.A. v. First Interstate Bank of Denver, N.A., 511 U.S.

164, 182 (1994) (“[W]hen Congress enacts a statute under which a person may sue and recover

damages from a private defendant for the defendant’s violation of some statutory norm, there is

no general presumption that the plaintiff may also sue aiders and abettors.”); Dinsmore v.

Squadron, Ellenoff, Plesent, Shienfeld & Sorkin, 135 F.3d 837, 842 (2d Cir. 1998) (extending

the Supreme Court’s reasoning in Central Bank of Denver to conspiracy liability). In this case,

the statute’s plain language, structure, and history all suggest that Congress had no intention of

permitting plaintiffs to bring civil actions for violations of the Stored Communications Act under

a theory of secondary liability. See 18 U.S.C. § 2707; S. Rep. No. 99-541, at 43 (1986),

reprinted in 1986 U.S.C.C.A.N. 3555, 3597; see also Garback v. Lossing, No. 09-cv-12407, 2010

WL 3733971, at *6 n.6 (E.D. Mich. Sept. 20, 2010) (“Congress did not expressly provide for

secondary liability for violations of [18 U.S.C.] §§ 2701 and 2707 and [plaintiff] offers no

persuasive authority for implying such liability.”); Jones v. Global Info. Grp., Inc., Civil Action

No. 3:06-00246-JDM, 2009 WL 799745, at *3 (W.D. Ky. Mar. 25, 2009) (“[S]ince Congress did
21

not criminalize the actions of aiding and abetting violations of 18 U.S.C. § 2701 as part of that

statute, and § 2707 authorize[s] awards of damages to private parties but does not mention aiders

or abettors or other secondary actors, this court will not infer secondary civil liability pursuant to

18 U.S.C. § 2707.”). Accordingly, Plaintiffs may not pursue claims against the CSP Defendants

(or any other Defendant) under a theory of secondary liability.

ii. Primary Liability.

In addition to their secondary liability theory, Plaintiffs contend that they “have

adequately pled a claim against Defendant CSP for primary liability because the Second

Amended Complaint pleads that Gaubatz and CSP had an agreement under which Gaubatz

would infiltrate and steal documents and emails and record conversations from Plaintiffs in order

to turn them over to CSP, and thus Plaintiffs have pled the existence of an agency relationship

between these two defendants.”5 (Pls.’ MTD Opp’n at 21.) At the outset, it is important to make

two overarching observations about Plaintiffs’ primary liability theory.

First, Plaintiffs confine their argument to CSP. Plaintiffs do not contend that they have

adequately pled a claim for primary liability against the remaining CSP Defendants: Christine

Brim, Adam Savit, and Sarah Pavlis. (See id.) Accordingly, Plaintiffs have conceded that they

cannot pursue claims against these three defendants under a theory of primary liability.

5
Because Plaintiffs concede that they must plead facts that plausibly support an inference that
an agency relationship existed between CSP and Chris Gaubatz, the Court has no occasion to
address that precise question at this time. But see Cumis Ins. Soc., Inc. v. Peters, 983 F. Supp.
2d 787, 796 (N.D. Ill. 1997) (“While the existence and extent of [an] agency relationship is a
question of fact, the plaintiff must sufficiently allege that an agency relationship existed in order
for his complaint to survive a Rule 12(b)(6) motion to dismiss.”); see also Acosta Orellana v.
CropLife Int’l, 711 F. Supp. 2d 81, 111 n.36 (D.D.C. 2010); Kiobel v. Royal Dutch Petroleum
Co., 621 F.2d 111, 195 n.56 (2d Cir. 2010); Lachmund v. ADM Investor Servs. Inc., 191 F.3d
777, 782 (7th Cir. 1999).
22

Second, as to CSP, Plaintiffs’ primary liability theory is a recent invention, raised for the

very first time in opposition to the CSP Defendants’ Motion to Dismiss. Significantly, when

they set forth the scope of their claim in the Second Amended Complaint, Plaintiffs asserted only

that CSP “conspired with” and “aided and abetted” Chris Gaubatz in violating the statute.

(Second Am. Compl. ¶¶ 82-83.) Nowhere in their description of Count Two did Plaintiffs even

intimate that CSP could be held liable under a theory of primary liability and/or as Chris

Gaubatz’s alleged principal. (See id. ¶¶ 79-85.) “It is axiomatic that a complaint may not be

amended by the briefs in opposition to a motion to dismiss.” Arbitraje Casa de Cambio, S.A. de

C.V. v. U.S. Postal Serv., 297 F. Supp. 2d 165, 170 (D.D.C. 2003) (quotation marks omitted).

For this reason alone, Plaintiffs’ newly minted primary liability claim against CSP must fail.

Moreover, even assuming, counterfactually, that Plaintiffs had asserted a primary liability

claim against CSP in the Second Amended Complaint, that claim would still fail. According to

Plaintiffs, “[s]everal facts support a finding that CSP and Chris Gaubatz consented to a principal-

agent relationship, including [1] Gaubatz’s delivery of stolen documents to CSP pursuant to a

prior agreement, [2] Gaubatz and CSP being a party to an agreement for Gaubatz to pursue an

internship with Plaintiffs under an assumed identity and steal confidential documents and record

oral conversations, [3] Chris Gaubatz and CSP being party to at least two written agreements for

Gaubatz to give CSP documents stolen from Plaintiffs[,] . . . . [4] Gaubatz informing CSP of the

confidentiality agreement he signed with Plaintiffs, and [5] Gaubatz and his father giving

documents and at least 51 discs of recordings and oral communications to CSP.” (Id. at 11

(citing Second Am. Compl. ¶¶ 4, 19, 31, 35, 44) (citations omitted).)

One problem with Plaintiffs’ argument is that it relies on a tortured reading of the

allegations that actually appear in the Second Amended Complaint; those allegations, insofar as
23

they are reasonably specific and not conclusory, largely pertain to David Gaubatz’s, and not

Chris Gaubatz’s, direct dealings with CSP. Even affording the Second Amended Complaint a

generous construction, there is relatively little in the way of specific allegations suggesting that

Chris Gaubatz had a direct relationship with CSP, let alone an agency relationship. This

disconnect becomes only more pronounced in Plaintiffs’ proposed Third Amended Complaint, in

which Plaintiffs specifically identify several agreements that they claim provide the structure to

the alleged conspiracy between the Defendants, all of which were entered into by David

Gaubatz, not Chris Gaubatz. (See Third Am. Compl. ¶¶ 22, 43, 54.).

But a more pressing problem is that the five allegations that Plaintiffs rely upon, whether

they are considered together or independently, do not plausibly suggest that an agency

relationship existed between CSP and Chris Gaubatz. Most notably, these allegations do not

suggest that CSP had “the right to control and direct [Chris Gaubatz] in the performance of his

work and the manner in which the work [was] to be done”—the sine qua non of an agency

relationship. Judah v. Reiner, 744 A.2d 1037, 1040 (D.C. 2000) (quotation marks omitted).6

Nor do these five allegations indicate that CSP selected and engaged Chris Gaubatz, paid Chris

Gaubatz wages, had the power to discharge Chris Gaubatz, or that Chris Gaubatz’s duties were

part of CSP’s regular business. See id. At best, Plaintiffs’ allegations suggest that CSP and

Chris Gaubatz had an ordinary, arms-length contractual relationship. Plaintiffs’ allegations

6
Both Plaintiffs and the CSP Defendant assume that District of Columbia law applies in this
context. (See Pls.’ MTD Opp’n at 10-11; CSP Defs.’ MTD Reply at 6.) The Court need not, and
does not, question this assumption. See Patton Boggs LLP v. Chevron Corp., 683 F.3d 397, 403
(D.C. Cir. 2012).
24

simply do not plausibly suggest that an agency relationship existed between CSP and Chris

Gaubatz. Accordingly, Plaintiffs may not pursue a claim for primary liability against CSP.7

* * *

To summarize, the CSP Defendants’ Motion to Dismiss shall be GRANTED IN PART

and DENIED IN PART. Specifically, Count One of the Second Amended Complaint (Federal

and D.C. Wiretap Acts) shall be DISMISSED insofar as Plaintiffs seek to hold the CSP

Defendants (or any other Defendant) liable (1) under the Federal or D.C. Wiretap Acts using a

theory of secondary liability and (2) under the Federal Wiretap Act using a theory of

procurement liability. Count Two of the Second Amended Complaint (Stored Communications

Act) shall be DISMISSED (1) against the CSP Defendants (and any other Defendant) insofar as

Plaintiffs rely on a theory of secondary liability and (2) against the CSP Defendants insofar as

Plaintiffs rely on a theory of primary liability.

B. Plaintiffs’ Motion to Amend

Through their Motion to Amend, Plaintiffs request leave to amend the Second Amended

Complaint to (1) add SANE and Yerushalmi as a third set of defendants, (2) assert claims for

fraud and trade secret misappropriation against all Defendants, (3) narrow the scope of their

demand for damages, and (4) add certain clarifying allegations in support of extant claims. (See

Comparison of Second Am. Compl. and Proposed Third Am. Compl., ECF No. [112-2].)

Because leave to amend is to be “freely given,” and because the grounds stated for Defendants’

opposition are insufficient to warrant denying the relief sought, the Court shall GRANT the

7
Because the Court’s decision does not turn on a purely legal matters, its logic cannot readily be
applied across all Defendants.
25

motion in large part. However, because the addition of certain claims would be futile, the

motion shall also be DENIED in part.

1. Scope

The Court begins by addressing the five proposed changes and how they relate to this

case. The bottom line is that, while Plaintiffs’ proposed amendments would certainly expand the

scope of this case, they would not radically reshape the litigation. See Smith v. Cafe Asia, 598

F. Supp. 2d 45, 48 (D.D.C. 2009) (“Courts generally consider the relation of the proposed

amended complaint to the original complaint, favoring proposed complaints that do not radically

alter the scope and nature of the case.”) (quotation marks omitted).

i. SANE and Yerushalmi.

First, Plaintiffs propose to add SANE and Yerushalmi as defendants. The Second

Amended Complaint named as defendants five John and Jane Does whose identities were then

unknown but who were alleged to have participated in, aided and abetted, or benefited from the

Gaubatz Defendants’ and CSP Defendants’ misconduct. (See Second Am. Compl. ¶ 18.) After

Plaintiffs filed and everyone had answered the Second Amended Complaint, the parties

proceeded to conduct discovery in earnest. During discovery, Defendants produced to Plaintiffs

two agreements between David Gaubatz and SANE, both executed by Yerushalmi on SANE’s

behalf, and a third agreement between David Gaubatz and CSP. Pursuant to the first agreement,

SANE engaged David Gaubatz to “serve as the Director of the Mapping Shari’a in America:

Knowing the Enemy Project.” (Third Am. Compl., Ex. A at PDG000010.) The agreement

contemplated that David Gaubatz would perform unspecified “field work” and oversee the

collection of “field data.” (Id.) “All work product, including written, electronic, and digital

material collected . . . [would] be the exclusive property of SANE.” (Id.) The second, undated
26

agreement terminated the first agreement. (Id., Ex. C at PDG000012-13.) In this agreement,

David Gaubatz represented that he was “in possession of the materials collected during and in

furtherance of the [Mapping Shari’a] Project, including the printed materials, video, and audio

tapes” and agreed to deliver all such materials to CSP. (Id.) In the third agreement, CSP

engaged David Gaubatz to organize a “team” to “secure volunteer positions within The Council

on American-Islamic Relations” and “secretly record (using audio and video recording devices)

activities they observe within CAIR offices and other locations or events, as directed by [CSP] in

its sole discretion.” (Third Am. Compl., Ex. B at CSP000176.) According to Plaintiffs’ theory,

these three agreements evidence a “potentially far-reaching relationship between David

Yerushalmi, SANE, CSP and the Gaubatzes” to “commit the torts and statutory violations

enumerated in the Third Amended Complaint.” (Pls.’ MTA Mem. at 2-3.)

Federal Rule of Civil Procedure 21 allows a district court to add a party “at any time” and

“on just terms.” FED. R. CIV. P. 21. Rule 20, in turn, defines the contours of permissive joinder,

providing that parties may be joined as defendants in a single action if (1) “any right to relief is

asserted against them jointly, severally, or in the alternative with respect to or arising out of the

same transaction, occurrence, or series of transactions or occurrences” and (2) “any question of

law or fact common to all defendants will arise in the action.” FED. R. CIV. P. 20(a)(2). When

asked to decide whether permissive joinder is appropriate, the district court should be guided by

the underlying aims of joinder, which include promoting judicial economy, expediting the

resolution of disputes, and eliminating unnecessary litigation. Swan v. Ray, 293 F.3d 1252, 1253

(11th Cir. 2002). In this case, Plaintiffs contend that SANE and Yerushalmi are participants in

the same overarching scheme to infiltrate Plaintiffs’ offices with the aim of obtaining Plaintiffs’

internal documents and recording conversations involving Plaintiffs’ employees. (See Third
27

Am. Compl. ¶¶ 2-5.) Plaintiffs intend to pursue essentially the same set of legal claims and

theories, with minor variations, against all Defendants. (See id. ¶¶ 79-163.)

In sum, Plaintiffs claim that SANE and Yerushalmi are liable on essentially the same

legal theories and the same set of facts. As a result, granting Plaintiffs leave to name SANE and

Yerushalmi as defendants in this action will promote judicial economy, expedite the resolution of

Plaintiffs’ claims, and eliminate unnecessary litigation. In short, it aligns with the general

preference “toward entertaining the broadest possible scope of action [that is] consistent with

fairness to the parties.” United Mine Workers of Am. v. Gibbs, 383 U.S. 715, 724 (1966).

ii. Claims for Fraud and Trade Secret Misappropriation.

Second, Plaintiffs propose to add claims for fraud and trade secret misappropriation

against all Defendants. (See Third Am. Compl. ¶¶ 142-63.) Both claims are based on the same

nucleus of facts set forth in the Second Amended Complaint. In other words, the claims

basically “state an alternative theory of recovery.” Foman, 371 U.S. at 182.

iii. Damages Demand.

Third, Plaintiffs propose to narrow the scope of their demand for damages to reflect that

they no longer seek damages for lost donations or diminished political contacts. (See Third Am.

Compl., Prayer for Relief ¶¶ 5, 7-9.) So far as the Court can tell, Defendants do not actually

oppose this aspect of Plaintiffs’ Motion to Amend. (See Pls.’ MTA Mem. at 1.) In any event,

the proposed amendment would only narrow the scope of Defendants’ potential liability and

further simplify this case.

iv. Clarifying Allegations.

Fourth, and finally, Plaintiffs propose to add various clarifying allegations in support of

extant claims. While the Court does not believe that the addition of these factual allegations is
28

likely to change the outcome of the legal issues presented in this case, that is of no matter.

Plaintiffs’ proposed factual allegations fine-tune the basis for the relief they seek in this action.

As the Court has previously observed, “[f]actual allegations of this kind, which clarify but do not

reshape the action, are rarely a bad thing.” Council on American-Islamic Relations Action

Network, Inc., 793 F. Supp. 2d at 394.

2. Undue Delay, Prejudice, and Bad Faith

Our jurisprudence reflects a longstanding preference for allowing a plaintiff to “test his

claim on the merits” if it “may be a proper subject of relief.” Foman, 371 U.S. at 182. As a

result, “[o]nly limited circumstances justify a district court’s refusal to grant [] leave to amend:

undue delay, bad faith on the part of the moving party, or undue prejudice to the opposing party.”

Sinclair v. Kleindienst, 645 F.2d 1080, 1085 (D.C. Cir. 1981). Because leave to amend should

be “freely given,” FED. R. CIV. P. 15(a)(2), the party opposing amendment bears the burden of

demonstrating undue delay, bad faith, or prejudice. City of New York v. Grp. Health Inc., 259

F.3d 151, 157 (2d Cir. 2011); see also Abdullah, 530 F. Supp. 2d at 115.

In this case, the crux of Defendants’ opposition is that Plaintiffs’ Motion to Amend—and,

more specifically, Plaintiffs’ proposal to add SANE and Yerushalmi as defendants—“is a

transparent litigation tactic undertaken in bad faith and with serious irremediable, prejudicial

harm to all Defendants.” (Defs.’ MTA Opp’n at 1.) According to Defendants, Plaintiffs “have

known of their potential claims against Yerushalmi and SANE since February 2011,” but make

this “last-minute” Motion to Amend “to deprive CSP Defendants of their choice of legal counsel

and to prejudice the other defendants and those putative party-defendants Plaintiffs now seek to

add.” (Id. at 1-2.) For the reasons set forth below, the Court finds that Defendants have failed to

29

carry their burden of demonstrating that Plaintiffs can be charged with bad faith or undue delay,

or that amendment would result in undue prejudice.

As an initial matter, it is worth noting that Plaintiffs first filed their Motion to Amend

within the deadline expressly contemplated by the Court’s scheduling order. (See Scheduling &

Procedures Order (Sept. 1, 2011) at 5.) When the Court went about the task of structuring a

schedule for the fair and efficacious resolution of this case, it was not oblivious to the fact that

matters uncovered during the course of discovery might very well lead to the desire to add or

alter parties, claims, and factual allegations. Nonetheless, to ensure that any appropriate

amendments were filed with enough time for the parties to conduct any additional discovery

concerning those amendments, the Court set a specific deadline for motions to amend. See FED.

R. CIV. P. 16(b)(3)(A) (“The scheduling order must limit the time to join other parties, amend the

pleadings, complete discovery, and file motions.”). The fact that Plaintiffs acted within the

specific time constraints contemplated by the Court is an important consideration counseling

against a finding that Plaintiffs acted with undue delay in filing the pending motion. Indeed,

Plaintiffs acted as the Court expected.

Defendants nonetheless fault Plaintiffs for not filing their motion earlier, averring that

Plaintiffs’ counsel had raised similar allegations concerning SANE and Yerushalmi’s

involvement in the events underlying this case in other, unrelated proceedings as early as

February 2011. (See Defs.’ MTA Opp’n at 2-3, 6-10.) But even if Plaintiffs’ counsel had some

basis to believe that SANE and Yerushalmi were somehow implicated in these events in

February 2011, Plaintiffs did not unduly delay moving to amend the Complaint by waiting until

they received document responses from the extant Defendants between December 2011 and

February 2012. As set forth elsewhere (see supra Part III.B.1.i), those document productions
30

included the three agreements that serve as the factual predicate for Plaintiffs’ present contention

that Defendants, including SANE and Yerushalmi, were all involved in the same alleged

overarching scheme to infiltrate Plaintiffs’ offices with the aim of obtaining Plaintiffs’ internal

documents and recording conversations involving Plaintiffs’ employees. Plaintiffs’ allegations

against SANE and Yerushalmi may or may not have passed muster even in the absence of these

agreements. See FED. R. CIV. P. 11(b)(3) (“By presenting to the court a pleading . . . an attorney

or unrepresented party certifies to the best of [her] knowledge, information, and belief, formed

after an inquiry reasonable under the circumstances . . . [that] the factual contentions have

evidentiary support or, if specifically so identified, will likely have evidentiary support after a

reasonable opportunity for further investigation or discovery.”). But regardless of whether or not

that would be the case, it certainly was not unreasonable for Plaintiffs to defer asserting claims

against SANE and Yerushalmi until they had more concrete evidence in hand, especially given

that the extant Defendants’ discovery responses were still outstanding and Plaintiffs’ deadline to

seek leave to amend under the Court’s scheduling order had not yet expired. Ultimately,

Plaintiffs motion to amend came relatively close in time after they had a meaningful opportunity

to review Defendants’ document productions, and within the specific deadline contemplated by

the Court. It was not unduly delayed.

Furthermore, to warrant denial of leave to amend, any delay in seeking leave must be

accompanied by a showing of bad faith or prejudice. See Caribbean Broad. Sys., Ltd. v. Cable &

Wireless P.L.C., 148 F.3d 1080, 1084 (D.C. Cir. 1998). To reiterate, Defendants, as the parties

opposing amendment, bear the burden of establishing bad faith or prejudice. See City of New

York, 259 F.3d at 157; Abdullah, 530 F. Supp. 2d at 115. Defendants offer two reasons why the

Court should find that they have satisfied their burden. The Court addresses each in turn.
31

First, Defendants contend that the CSP Defendants will be prejudiced because

Yerushalmi “will have to withdraw” as one of their attorneys in this case once named as a

defendant. (Defs.’ MTA Opp’n at 1.) Defendants argue that “when a party is effectively denied

legal counsel of its choosing as a result of a tardy amendment to the complaint, it is proper and

appropriate to deny such requests to amend on grounds of undue prejudice. (Id. (citing

Atchinson v. District of Columbia, 73 F.3d 418, 426-28 (D.C. Cir. 1996).) As an initial matter,

the authority relied upon by Defendants, Atchinson, does not even remotely support such an

expansive proposition and is, moreover, wholly distinguishable from the circumstances presented

here. That case addressed the question of whether the district court acted within its discretion in

denying a motion for leave to amend filed “a few days before trial was to begin,” when the

plaintiff sought to assert claims against a government official in his personal capacity for the first

time, despite having made prior representations that the official was sued solely in his official

capacity and despite the fact that, had the amendment been brought sooner, the official might

have sought private counsel in lieu of joint representation with the government. See Atchinson,

73 F.3d at 424-28. The CSP Defendants are not similarly situated. Even assuming, arguendo,

that Yerushalmi ultimately withdraws as the CSP Defendants’ counsel in this case, the CSP

Defendants will be afforded a fair opportunity to select alternate counsel of their choosing. That

said, it is not even clear whether that would be necessary because the CSP Defendants are also

represented by two other attorneys from two separate organizations, and have been for quite

some time (indeed, for as long as they have been defendants in this case). (See Appearance of

Counsel, ECF No. [91]; Notice of Appearance, ECF No. [109].) On this record, the Court finds

that Defendants have failed to carry their burden of showing that any inconvenience that they

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might experience as a result of Yerushalmi’s potential withdrawal would outweigh Plaintiffs’

interest in testing the merits of their claims.

Second, Defendants contend that the CSP Defendants will be unduly prejudiced because

SANE and Yerushalmi, if named as defendants, will have at their disposal “client confidences

and information for use in potential cross-claims against these very same clients and third-party

claims against yet other clients associated with [the] CSP Defendants.” (Defs.’ MTA Opp’n at

1.) But Defendants never explain why this alleged prejudice would be attributable to granting

leave to amend and not the mere fact that Plaintiffs intend to assert claims against SANE and

Yerushalmi. Defendants do not suggest that, if Plaintiffs’ are denied leave to amend now, that

the statute(s) of limitations or some other bar would preclude Plaintiffs from simply commencing

a separate civil action against SANE and Yerushalmi. In that event, the same issues concerning

“client confidences” would arise, only in a different format and procedural posture. The only

difference would be that the parties, and the Court, would lose the benefit of resolving related

claims against related parties in a single, expeditious action.8 In the absence of some explanation

as to why the alleged prejudice would be attributable to granting leave to amend, and not some

other circumstances, the record before the Court is insufficient to conclude that Defendants have

carried their burden of showing undue delay, bad faith, or prejudice.

8
Regardless, the Court is not persuaded that any such alleged prejudice can be attributed to
Plaintiffs and not Defendants themselves. By Defendants’ own account, Plaintiffs’ counsel had
raised her suspicions about SANE and Yerushalmi’s involvement in the events underlying this
case as early as February 2011, and again in May 2011. (See Defs.’ MTA Opp’n at 2.) The
Court did not grant Plaintiffs leave to add the CSP Defendants as defendants in this case until
June 2011 and Yerushalmi did not enter an appearance until July 2011. (See Appearance of
Counsel, ECF No. [90].) Even thereafter, Defendants should have been on notice of a potential
problem because Plaintiffs had directed aspects of their discovery requests to identifying the role
that SANE and Yerushalmi played in this case. As such, the CSP Defendants and Yerushalmi,
and not Plaintiffs, must bear much of the blame for the current state of affairs.
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3. Futility

Finally, Defendants contend that leave to amend should be denied because amendment

would be futile. The vast majority of Defendants’ futility arguments are obviously improper at

this procedural posture. For those most part, Defendants’ arguments clearly depend and rely

upon materials outside the four corners of the pleadings. (See Defs.’ MTA Opp’n at 14, 19-22.)

Others ask the Court to credit Defendants’ account of what certain agreements truly concerned

over contrary allegations in the Third Amended Complaint. (See id. at 22-25). Such arguments

are premature and a waste of the parties’ time and the Court’s limited resources. Defendants will

have an opportunity to raise their arguments, if appropriate, in a motion for summary judgment

following the close of all discovery.

However, to the extent Defendants’ arguments mirror those arguments concerning

Counts One and Two of the Second Amended Complaint first raised in the CSP Defendants’

Motion to Dismiss, the Court concurs that amendment is futile for the reasons set forth in detail

previously. (See supra Part III.A.). First, Plaintiffs cannot pursue a claim against either SANE

or Yerushalmi under the Federal Wiretap Act using a theory of procurement liability (see Third

Am. Compl. ¶ 84) because such a theory is not cognizable under the statute (see supra Part

III.A.1.i). Second, Plaintiffs cannot pursue a claim against either SANE or Yerushalmi under the

Federal and D.C. Wiretap Acts using a theory of secondary liability (see Third Am. Compl. ¶¶

85-86), because such a theory is not cognizable under the statutes (see supra Part III.A.1.ii).

Third, Plaintiffs cannot pursue a claim against either SANE or Yerushalmi under the Stored

Communications Act using a theory of secondary liability (see Third Am. Compl. ¶¶ 92-93)

because such a theory is not cognizable under the statute (see supra Part III.A.2.i). Accordingly,

the Court shall DENY Plaintiffs’ Motion to Amend with respect to those proposed changes.
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* * *

In the end, with few exceptions, Defendants have failed to discharge their burden of

coming forward with a colorable basis for denying leave to amend. See Abdullah, 530 F. Supp.

2d at 115. The Court concludes that granting leave to amend is appropriate in this case, except

insofar as it has found that amendment would be futile. Accordingly, Plaintiffs’ Motion to

Amend shall be GRANTED IN PART and DENIED IN PART. Specifically, the motion shall be

DENIED insofar as Plaintiffs seek to assert claims against either SANE or Yerushalmi (1) under

the Federal Wiretap Act using a theory of procurement liability, (2) under the Federal or D.C.

Wiretap Acts using a theory of secondary liability, and (3) under the Stored Communications Act

using a theory of secondary liability. Plaintiffs’ motion shall otherwise be GRANTED.

For purposes of expediency, the Court shall simply direct the Clerk of the Court to accept

Plaintiffs’ Third Amended Complaint for filing, with the understanding that the aforementioned

claims (and any other claims previously dismissed) are not viable. In addition, in order to

facilitate the prompt resolution of this litigation, the Court shall require Plaintiffs to effect

service of the Summons and Third Amended Complaint upon SANE and Yerushalmi by no later

than October 1, 2012. See FED. R. CIV. P. 21 (providing a district court may impose “just terms”

on the addition of any party). If Plaintiffs fail to effect service of process by the designated date,

the Court will dismiss this action without prejudice against SANE and Yerushalmi. No

extensions will be granted absent compelling circumstances.

IV. CONCLUSION AND ORDER

For the reasons set forth above, it is, this 17th day of September, 2012, hereby

ORDERED that the CSP Defendants’ [97] Motion to Dismiss is GRANTED IN PART

and DENIED IN PART:
35

(a) Count One of the Second Amended Complaint (Federal and D.C. Wiretap Acts) is

DISMISSED insofar as Plaintiffs seek to hold the CSP Defendants (or any other

Defendant) liable (1) under a theory of secondary liability, with respect to both

the Federal and D.C. Wiretap Acts and (2) under a theory of procurement liability,

with respect to the Federal Wiretap Act only.

(b) Count Two of the Second Amended Complaint (Stored Communications Act) is

DISMISSED (1) against the CSP Defendants (and any other Defendant) insofar as

Plaintiffs rely on a theory of secondary liability and (2) against the CSP

Defendants insofar as Plaintiffs rely on a theory of primary liability.

(c) The motion is otherwise DENIED.

It is FURTHER ORDERED that Plaintiffs’ [112] Motion to Amend is GRANTED IN

PART and DENIED IN PART:

(a) The motion is DENIED insofar as Plaintiffs seek to assert claims against either

SANE or Yerushalmi (1) under the Federal Wiretap Act using a theory of

procurement liability, (2) under the Federal or D.C. Wiretap Acts using a theory

of secondary liability, and (3) under the Stored Communications Act using a

theory of secondary liability.

(b) Plaintiffs’ motion is otherwise GRANTED.

It is FURTHER ORDERED that the Clerk of the Court shall accept Plaintiffs’ [112-1]

Third Amended Complaint for filing. By no later than October 1, 2012, Plaintiffs shall effect

service of the Summons and Third Amended Complaint on SANE and Yerushalmi and file proof

of service with the Court. If Plaintiffs fail to effect service of process by the designated date, the

36

Court will dismiss this action without prejudice against SANE and Yerushalmi. No extensions

will be granted absent compelling circumstances.

It is FURTHER ORDERED that, on November 5, 2012, at 9:00 a.m., a Status Hearing

shall be held before Judge Colleen Kollar-Kotelly in Courtroom 28A of the United States

Courthouse for the United States District Court for the District of Columbia at 333 Constitution

Ave., N.W., Washington, D.C. 20001.

* * *

As a result of the Court’s prior decisions and today’s decision, the following claims in the

Third Amended Complaint are not viable:

(1) Count One (Federal and D.C. Wiretap Acts), insofar as Plaintiffs: (a) seek relief

under the Federal Wiretap Act against any Defendant under a theory of

procurement liability; or (b) seek relief under either the Federal or D.C. Wiretap

Acts against any Defendant under a theory of secondary liability;

(2) Count Two (Stored Communications Act), insofar as Plaintiffs: (a) seek relief

against any Defendant under a theory of secondary liability; or (b) seek relief

against the CSP Defendants under a theory of primary liability; and

(3) Count Three (Conversion) insofar as Plaintiffs seek relief against any Defendant

for the conversion of electronic data.

SO ORDERED.

_____/s/______________________
COLLEEN KOLLAR-KOTELLY
United States District Judge

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